Correlation Between NTG Nordic and Koninklijke Ahold

Can any of the company-specific risk be diversified away by investing in both NTG Nordic and Koninklijke Ahold at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining NTG Nordic and Koninklijke Ahold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NTG Nordic Transport and Koninklijke Ahold Delhaize, you can compare the effects of market volatilities on NTG Nordic and Koninklijke Ahold and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in NTG Nordic with a short position of Koninklijke Ahold. Check out your portfolio center. Please also check ongoing floating volatility patterns of NTG Nordic and Koninklijke Ahold.

Diversification Opportunities for NTG Nordic and Koninklijke Ahold

-0.37

Correlation Coefficient

NTG Nordic  Koninklijke Ahold

Very good diversification

The 3 months correlation between NTG and Koninklijke is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding NTG Nordic Transport and Koninklijke Ahold Delhaize in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koninklijke Ahold and NTG Nordic is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on NTG Nordic Transport are associated (or correlated) with Koninklijke Ahold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koninklijke Ahold has no effect on the direction of NTG Nordic i.e., NTG Nordic and Koninklijke Ahold go up and down completely randomly.

Pair Corralation between NTG Nordic and Koninklijke Ahold

Assuming the 90 days trading horizon NTG Nordic Transport is expected to under-perform the Koninklijke Ahold. In addition to that, NTG Nordic is 1.09 times more volatile than Koninklijke Ahold Delhaize. It trades about -0.49 of its total potential returns per unit of risk. Koninklijke Ahold Delhaize is currently generating about -0.04 per unit of volatility. If you would invest  3,239  in Koninklijke Ahold Delhaize on September 17, 2024 and sell it today you would lose (31.00) from holding Koninklijke Ahold Delhaize or give up 0.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

NTG Nordic Transport  vs.  Koninklijke Ahold Delhaize

NTG Nordic Transport

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NTG Nordic Transport has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Koninklijke Ahold

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Koninklijke Ahold Delhaize are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Koninklijke Ahold is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with NTG Nordic and Koninklijke Ahold

The main advantage of trading using opposite NTG Nordic and Koninklijke Ahold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NTG Nordic position performs unexpectedly, Koninklijke Ahold can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Koninklijke Ahold will offset losses from the drop in Koninklijke Ahold's long position.

The idea behind NTG Nordic Transport and Koninklijke Ahold Delhaize pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.